SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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WESTFILED FINANCIAL, INC.
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(Name of Registrant as Specified in Its Charter)
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[LOGO] WESTFIELD
FINANCIAL, INC.
April 15, 2005
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Westfield Financial, Inc., the holding company for
Westfield Bank, which will be held on May 20, 2005 at 10:00 a.m., Eastern
Time, at the Tekoa Country Club, located at 459 Russell Road, Westfield,
Massachusetts 01085.
The attached Notice of Annual Meeting and proxy statement describe
the formal business that we will transact at the annual meeting. In
addition to the formal items of business, management will report on the
operations and activities of Westfield Financial and Westfield Bank, and
you will have an opportunity to ask questions.
The Board of Directors of Westfield Financial has determined that an
affirmative vote on the matter to be considered at the annual meeting is in
the best interests of Westfield Financial and its shareholders and
unanimously recommends a vote "FOR" this matter.
Please complete, sign and return the enclosed proxy card promptly,
whether or not you plan to attend the annual meeting. Your vote is
important regardless of the number of shares you own. Voting by proxy will
not prevent you from voting in person at the annual meeting but will assure
that your vote is counted if you cannot attend.
On behalf of the Board of Directors and the employees of Westfield
Financial and Westfield Bank, we thank you for your continued support and
look forward to seeing you at the annual meeting.
Sincerely yours,
/s/ Donald A. Williams
Donald A. Williams
President and Chief Executive
Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: Friday, May 20, 2005
Time: 10:00 a.m., Eastern Time
Place: Tekoa Country Club
459 Russell Road
Westfield, Massachusetts 01085
At our 2005 Annual Meeting, we will ask you to:
1. Elect the following individuals to serve as directors for a
term of office stated next to the individual nominee's name:
Nominees Term to Expire
----------------------------- --------------
<s> <c>
Robert T. Crowley, Jr. 2008
Harry C. Lane 2008
William H. McClure 2008
Paul R. Pohl 2008
2. Transact any other business as may properly come before the
annual meeting.
You may vote at the annual meeting if you were a shareholder of
Westfield Financial at the close of business on March 25, 2005, the record
date.
By Order of the Board of Directors,
/s/ Donald A. Williams
Donald A. Williams
President and Chief Executive
Officer
Westfield, Massachusetts
April 15, 2005
You are cordially invited to attend the annual meeting. It is important
that your shares be represented regardless of the number of shares you own.
The Board of Directors urges you to sign, date and mark the enclosed proxy
card promptly and return it in the enclosed envelope. Returning the proxy
card will not prevent you from voting in person if you attend the annual
meeting.
GENERAL INFORMATION
GENERAL
Westfield Financial, Inc. is a Massachusetts-chartered stock holding
company, which was organized in November 2001. Westfield Financial is
registered as a savings and loan holding company with the Office of Thrift
Supervision and owns all of the capital stock of Westfield Bank. Westfield
Mutual Holding Company owns 56.3% of the outstanding shares of Westfield
Financial's common stock, which is listed on the American Stock Exchange
under the symbol "WFD." As used in this proxy statement, "we", "us" and
"our" refer to Westfield Financial and/or its subsidiaries, depending on
the context. The term "annual meeting," as used in this proxy statement,
includes any adjournment or postponement of such meeting.
We have sent you this proxy statement and enclosed proxy card because
the Board of Directors is soliciting your proxy to vote at the annual
meeting. This proxy statement summarizes the information you will need to
know to cast an informed vote at the annual meeting. You do not need to
attend the annual meeting to vote your shares. You may simply complete,
sign and return the enclosed proxy card and your votes will be cast for you
at the annual meeting. This process is described below in the section
entitled "Voting Rights."
We began mailing this proxy statement, the Notice of Annual Meeting
and the enclosed proxy card on or about April 15, 2005 to all shareholders
entitled to vote. If you owned common stock of Westfield Financial at the
close of business on March 25, 2005, the record date, you are entitled to
vote at the annual meeting. On the record date, there were 9,954,512
shares of common stock outstanding.
QUORUM
A quorum of shareholders is necessary to hold a valid meeting. If
the holders of at least a majority of the total number of the outstanding
shares of common stock entitled to vote are represented in person or by
proxy at the annual meeting, a quorum will exist. We will include proxies
marked as abstentions and broker non-votes to determine the number of
shares present at the annual meeting.
VOTING RIGHTS
You are entitled to one vote at the annual meeting for each share of
the common stock of Westfield Financial that you owned as of the record
date at the close of business on March 25, 2005. The number of shares you
own (and may vote) is listed at the top of the back of the proxy card.
You may vote your shares at the annual meeting in person or by proxy.
To vote in person, you must attend the annual meeting and obtain and submit
a ballot, which we will provide to you at the annual meeting. To vote by
proxy, you must complete, sign and return the enclosed proxy card. If you
properly complete your proxy card and send it to us in time to vote, your
"proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make
specific choices, your proxy will vote your shares "For" the proposal
identified in the Notice of Annual Meeting.
If any other matter is presented, your proxy will vote the shares
represented by all properly executed proxies on such matters as a majority
of the Board of Directors determines. As of the date of this proxy
statement, we know of no other matters that may be presented at the annual
meeting, other than that listed in the Notice of Annual Meeting.
1
VOTE BY WESTFIELD MUTUAL HOLDING COMPANY
Westfield Mutual Holding Company owns 56.3% of the outstanding shares
of Westfield Financial's common stock. All shares of Westfield Financial
owned by Westfield Mutual Holding Company will be voted in accordance with
the instructions of the Board of Directors of Westfield Mutual Holding
Company. Westfield Mutual Holding Company is expected to vote "For" the
proposal identified in the Notice of Annual Meeting for which it is
entitled to vote.
VOTE REQUIRED
Proposal 1: Election of Four The nominees for director who receive the
Directors most votes will be elected. So, if you do
not vote for a nominee, or you indicate
"withhold authority" for any nominee on
your proxy card, your vote will not count
"for" or "against" the nominee. You may
not vote your shares cumulatively for the
election of directors. Because Westfield
Mutual Holding Company owns more than 50%
of Westfield Financial's outstanding
shares, we expect that Westfield Mutual
Holding Company will control the outcome
of the vote on this proposal.
EFFECT OF BROKER NON-VOTES
If your broker holds shares that you own in "street name," the broker
may vote your shares on the proposal listed above even if the broker does
not receive instructions from you. If your broker does not vote on the
proposal, this will constitute a "broker non-vote." A broker non-vote
would have no effect on the outcome of the proposal because only a
plurality of votes cast is required to elect a director.
CONFIDENTIAL VOTING POLICY
Westfield Financial maintains a policy of keeping shareholder votes
confidential. We only let our Inspector of Election and certain employees
of our independent tabulating agent examine the voting materials. We will
not disclose your vote to management unless it is necessary to meet legal
requirements. Our independent tabulating agent will, however, forward any
written comments that you may have to management.
REVOKING YOUR PROXY
You may revoke your grant of proxy at any time before it is voted by:
* filing a written revocation of the proxy with the Secretary;
* submitting a signed proxy card bearing a later date; or
* attending and voting in person at the annual meeting, but you
also must file a written revocation with the Secretary of the
annual meeting prior to the voting.
If your shares are not registered in your own name, you will need
appropriate documentation from your shareholder of record to vote
personally at the annual meeting. Examples of such documentation include a
broker's statement, letter or other document that will confirm your
ownership of shares of Westfield Financial.
2
SOLICITATION OF PROXIES
Westfield Financial will pay the costs of soliciting proxies from its
shareholders. Directors, officers or employees of Westfield Financial and
Westfield Bank may solicit proxies by mail, telephone and other forms of
communication.
We will also reimburse banks, brokers, nominees and other fiduciaries
for the expenses they incur in forwarding the proxy materials to you.
OBTAINING AN ANNUAL REPORT ON FORM 10-K
If you would like a copy of our Annual Report on Form 10-K and
audited financials for the fiscal year ended December 31, 2004, filed with
the Securities and Exchange Commission ("SEC"), we will send you one
(without exhibits) free of charge. Please write to Philip R. Smith,
Secretary, Westfield Financial, Inc., 141 Elm Street, Westfield,
Massachusetts 01085.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders of Westfield Financial
The following table contains common stock ownership information for
persons known to Westfield Financial to "beneficially own" 5% or more of
Westfield Financial's common stock as of March 25, 2005. In general,
beneficial ownership includes those shares that a person has the power to
vote, sell or otherwise dispose of. Beneficial ownership also includes
that number of shares that an individual has the right to acquire within 60
days (such as stock options) after March 25, 2005. Two or more persons may
be considered the beneficial owner of the same shares. Westfield Financial
obtained the information provided in the following table from filings with
the SEC and from Westfield Financial.
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent
- -------------- ------------------- -------------------- -------
<s> <c> <c> <c>
Common Stock, Westfield Mutual Holding Company 5,607,400(1) 56.3%
par value $0.01 141 Elm Street
per share Westfield, MA 01085
Common Stock, Peter B. Cannell & Co., Inc. 503,940(2) 5.1%
par value $0.01 645 Madison Avenue
per share New York, NY 10022
<FN>
- --------------------
<F1> As reported by Westfield Mutual Holding Company in a Schedule 13D
dated January 7, 2002, which reported sole voting and dispositive
power over 5,607,400 shares.
<F2> As reported by Peter B. Cannell & Co., Inc. in a Schedule 13G dated
February 8, 2005, which reported sole voting and dispositive power
over 503,940 shares.
</FN>
3
Security Ownership of Management
The following table shows the number of shares of Westfield
Financial's common stock beneficially owned by each director, each
executive officer appearing in the "Summary Compensation Table," and all
directors and executive officers of Westfield Financial as a group, as of
March 25, 2005. Except as otherwise indicated, each person and each group
shown in the table has sole voting and investment power with respect to the
shares of common stock listed next to his or her name.
Amount and Nature of Percent of
Position with Beneficial Common Stock
Name Westfield Financial Ownership(1)(2)(3)(4)(5) Outstanding
- ------------------------- ------------------------ ------------------------ ------------
<s> <c> <c> <c>
Victor J. Carra Executive Vice President 77,673(6) *
and Director
David C. Colton, Jr. Director 13,068(7) *
Robert T. Crowley, Jr. Director 12,700(8) *
James C. Hagan Sr. Vice President and
Chief Lending Officer 14,982 *
Michael J. Janosco, Jr. Chief Financial Officer
and Treasurer 87,475(9) *
Rebecca S. Kozaczka Vice President and
Residential Loan Officer 12,414 *
Harry C. Lane Director 10,200 *
William H. McClure Director 13,200(10) *
Mary C. O'Neil Director 10,600(11) *
Richard C. Placek Director 15,200(12) *
Paul R. Pohl Director 20,196(13) *
Charles E. Sullivan Director 17,200(14) *
Thomas C. Sullivan Director 35,200 *
Donald A. Williams President, Chief 140,308(15) 1.41%
Executive Officer and
Director
Other Executive Officers 350,777(16) 3.52%
and ESOP
All Executive Officers 843,874(16) 8.34%
and Directors as a Group
(17 Persons)
<FN>
- --------------------
* Less than one percent of the total outstanding shares of common
stock.
<F1> See "Principal Shareholders of Westfield Financial" for definition of
"beneficial ownership."
<F2> Based on a total of 9,954,512 shares of Westfield Financial's Common
Stock outstanding as of March 25, 2005.
<F3> Includes unvested shares of restricted stock awards held in trust as
part of the Westfield Financial, Inc. 2002 Recognition and Retention
Plan (the "RRP"), with respect to which the beneficial owner has
voting but not investment power as follows: Messrs. Colton, Crowley,
Lane, McClure, Placek, Pohl, C. Sullivan, T. Sullivan and Ms. O'Neil
each - 3,000 shares; Mr. Williams - 29,400 shares; Mr. Carra - 17,640
shares; Mr. Janosco - 17,640 shares; Mr. Hagan - 6,000 shares; and
Ms. Kozaczka - 5,100 shares.
(Footnotes continue on the next page)
4
<F4> Includes shares allocated to the account of the individuals under the
Westfield Financial, Inc. Employee Stock Ownership Plan (the "ESOP")
with respect to which each individual has voting but not investment
powers as follows: Mr. Williams - 2,025 shares; Mr. Carra - 1,728
shares; Mr. Janosco - 1,855 shares; Mr. Hagan - 1,409 shares; and Ms.
Kozaczka - 1,040 shares. Includes shares held in trust in Westfield
Bank's 401(k) Plan as to which each participant has investment but
not voting powers as follows: Mr. Carra - 13,538 shares; Mr. Hagan -
1,413 shares; Ms. Kozaczka - 974 shares; and Mr. Williams - 9,213
shares.
<F5> Includes 5,200 shares of common stock which may be acquired by each
of Messrs. Colton, Crowley, Lane, McClure, Placek, Pohl, C. Sullivan,
T. Sullivan and Ms. O'Neil pursuant to vested options granted to them
under the 2002 Stock Option Plan (the "Stock Option Plan"). Also
includes shares of common stock which may be acquired pursuant to
vested options issued under the Stock Option Plan as follows: Mr.
Williams - 48,000 shares; Mr. Carra - 28,800 shares; Mr. Janosco -
28,800 shares; Mr. Hagan - 4,800 shares; and Ms. Kozaczka - 3,600
shares.
<F6> Includes 690 shares held in an individual retirement account ("IRA")
for the benefit of Mr. Carra's spouse, 830 shares held in an IRA for
the benefit of Mr. Carra, and 7,600 shares held jointly with Mr.
Carra's spouse.
<F7> Includes 1,432 shares held in an IRA for the benefit of Mr. Colton's
spouse, 936 shares held in an IRA for the benefit of Mr. Colton, and
500 shares held jointly with Mr. Colton's spouse.
<F8> Includes 2,500 shares held jointly with Mr. Crowley's spouse.
<F9> Includes 20,279 shares held jointly with Mr. Janosco's spouse, and
12,721 shares held in an IRA for the benefit of Mr. Janosco.
<F10> Includes 3,000 shares held jointly with Mr. McClure's spouse.
<F11> Includes 400 shares held jointly with Ms. O'Neil's spouse.
<F12> Includes 2,500 shares held by Mr. Placek's spouse.
<F13> Includes 9,996 shares held jointly with Mr. Pohl's spouse.
<F14> Includes 3,000 shares held in an IRA for the benefit of Mr. Sullivan.
<F15> Includes 20,700 shares held jointly with Mr. Williams' spouse, 5,650
shares held in an IRA for the benefit of Mr. Williams, and 5,720
shares held in an IRA for the benefit of Mr. Williams' spouse.
<F16> The figures shown for each of the executive officers named in the
table do not include 356,690 shares held in trust pursuant to the
ESOP that have not been allocated as of December 31, 2004 to any
individual's account and as to which each of the executive officers
named in the table share voting powers with the other ESOP
participants. The figure shown for all directors and executive
officers as a group includes 345,690 shares as to which members of
Westfield Financial's Compensation Committee (consisting of Messrs.
Lane, Pohl and T. Sullivan) may be deemed to have sole investment
power, except in limited circumstances, thereby causing each such
member to be deemed a beneficial owner of such shares. Each of the
members of the Compensation Committee disclaims beneficial ownership
of such shares and, accordingly, such shares are not attributed to
the members of the Compensation Committee individually. See "Benefit
Plans-Employee Stock Ownership Plan".
</FN>
5
DISCUSSION OF PROPOSAL RECOMMENDED BY BOARD
--------------------------------------------------
PROPOSAL 1
ELECTION OF DIRECTORS
--------------------------------------------------
GENERAL
Nominees Term to Expire
----------------------------- --------------
<s> <c>
Robert T. Crowley, Jr. 2008
Harry C. Lane 2008
William H. McClure 2008
Paul R. Pohl 2008
All four nominees are currently serving on Westfield Financial's
Board of Directors. If you elect all the nominees listed above, they will
hold office until the annual meeting in 2008 or until their successors have
been elected and qualified.
We know of no reason why any nominee may be unable to serve as a
director. If any nominee is unable to serve, your proxy may vote for
another nominee proposed by the Board. If for any reason these nominees
prove unable or unwilling to stand for election, the Board will nominate
alternates or reduce the size of the Board of Directors to eliminate the
vacancy. The Board has no reason to believe that its nominees would prove
unable to serve if elected.
===========================================================================
The Board of Directors unanimously recommends a vote "For" all of the
nominees for election as directors.
===========================================================================
NOMINEES AND DIRECTORS
Term Position(s) Held with Director
Nominees Age(1) Expires Westfield Financial Since(2)
- ---------------------- ------ ------- -------------------------------------- --------
<s> <c> <c> <c> <c>
Robert T. Crowley, Jr. 56 2005 Director 1999
Harry C. Lane 66 2005 Director 1978
William H. McClure 69 2005 Director 1996
Paul R. Pohl 63 2005 Director 1999
6
Term Position(s) Held with Director
Nominees Age(1) Expires Westfield Financial Since(2)
- ---------------------- ------ ------- -------------------------------------- --------
<s> <c> <c> <c> <c>
David C. Colton, Jr. 61 2006 Director 1980
Mary C. O'Neil 69 2006 Director 1994
Donald A. Williams 60 2006 President, Chief Executive Officer and 1983
Director
Victor J. Carra 64 2007 Executive Vice President and Director 1995
Richard C. Placek 65 2007 Director 1979
Charles E. Sullivan 61 2007 Director 1992
Thomas C. Sullivan 71 2007 Director 1989
<FN>
- --------------------
<F1> At December 31, 2004.
<F2> Includes terms served on the Board of Directors of Westfield Bank.
All members of the current Board of Directors of Westfield Financial
have served as directors since the company's inception in 2001.
</FN>
BIOGRAPHICAL INFORMATION
The principal occupation and business experience of each nominee for
election as director and each director are set forth below.
Nominees
Robert T. Crowley, Jr. is a Certified Public Accountant and a partner
in the accounting firm of Downey, Sweeney, Fitzgerald & Co., P.C. The firm
provides tax, accounting and auditing services to the public. Mr. Crowley
has been a partner with this firm since 1980 and a Certified Public
Accountant since 1979.
Harry C. Lane is the President of John S. Lane & Son, Inc., a quarry
and asphalt company located in Westfield, Massachusetts, incorporated in
1904. Mr. Lane has served in this capacity since 1986.
William H. McClure is the President of the McClure Insurance Agency,
Inc., a position he has held since December 1993. He is the owner of 51%
of this insurance agency, which sells and services fire, casualty, life and
health insurance. He is also an owner of 103 Van Deene Realty Trust, which
is made up of a building located at that same address.
Paul R. Pohl serves as the President and Owner of Chemi-Graphic,
Inc., a name plate manufacturing company located in Ludlow, Massachusetts.
Mr. Pohl has served in this capacity since 1964.
Continuing Directors
David C. Colton, Jr. is the former owner and operator of The Colton
Agency, Inc., an insurance agency located in Westfield, Massachusetts for
the past 65 years. He recently sold the business and is serving as an
independent consultant.
7
Mary C. O'Neil is the Vice President of Development and Community
Relations at Noble Health Systems, located in Westfield, Massachusetts.
Ms. O'Neil has held this position since 1993. Prior to that, she served as
President of T.L. O'Neil Insurance Agency, Inc.
Donald A. Williams has served as President of Westfield Bank since
1983 and Chief Executive Officer of Westfield Bank since 1987. Mr.
Williams has served in such capacities with Westfield Financial since its
inception in 2001.
Victor J. Carra has served as the Executive Vice President of
Westfield Bank since 1998 and Westfield Financial since its inception in
2001. Since 1975, Mr. Carra has served in various capacities during his
employment with Westfield Bank.
Richard C. Placek is the President of Commercial Distributing
Company, located in Westfield Massachusetts. Mr. Placek has held this
position since 1985. Prior to that, he served as General Manager.
Charles E. Sullivan is the President of Charles E. Sullivan C.P.A.,
Inc., a public accounting firm located in West Springfield, Massachusetts.
Mr. Sullivan has served in this capacity since 1979.
Thomas C. Sullivan is the former President and Chief Operating
Officer of Sullivan Paper Co., Inc., located in West Springfield,
Massachusetts. He retired from this position in 1998. Mr. Sullivan
presently serves as a director of Sullivan Paper Co., Inc., a position he
has held since 1959. He also serves as President and Director of Patriot
Realty, located in Appleton, Wisconsin, and is the Vice President and
Director of George Sullivan Realty, a realty company located in West
Springfield, Massachusetts. Mr. Sullivan has served in these capacities
since 1994 and 1970, respectively.
Executive Officers Who are Not Directors
Gerald P. Ciejka, age 44, was appointed Vice President of Westfield
Financial on February 22, 2005. Mr. Ciejka was previously a partner at the
Springfield, Massachusetts law firm of Bulkley, Richardson and Gelinas in
the business organization and real estate departments. From 1997 to 2004,
he served as branch manager and senior underwriting counsel for First
American Title Insurance Company and Chicago Title Insurance Company.
James C. Hagan, age 43, has served as Senior Vice President and
Commercial Loan Department Manager of Westfield Bank since 1998. From 1994
through 1998, Mr. Hagan was a Vice President at Westfield Bank.
Michael J. Janosco, Jr., age 58, has served as the Chief Financial
Officer and Treasurer of Westfield Bank since 1999 and of Westfield
Financial since its inception in 2001. Mr. Janosco was previously a
partner at KPMG Peat Marwick until his retirement in 1994. From 1994 to
1997, he served as the Chief Financial Officer and Treasurer of Primary
Bank, located in Peterborough, New Hampshire. From October 1997 to March
1999, he was a consultant to various banks.
Rebecca S. Kozaczka, age 53, has served as Vice President and
Residential Loan Officer at Westfield Bank since 1989. She worked as a
Mortgage Loan Officer and Assistant Vice President from 1985 until 1989.
Deborah J. McCarthy, age 45, has served as Vice President since 2000.
She is the Manager of the Operations and Information Systems departments.
She has worked for Westfield Bank in numerous capacities since 1979.
8
Leo R. Sagan, Jr., age 42, has served as the Vice President and
Controller of Westfield Financial since 2003. Prior to that he served as
Controller of Westfield Financial from 2002 to 2003 and as Assistant
Treasurer of Westfield Financial from 1999 to 2002.
SHAREHOLDER COMMUNICATIONS WITH OUR BOARD OF DIRECTORS
Shareholders may contact Westfield Financial's Board of Directors by
contacting Philip R. Smith, Secretary, at Westfield Financial, Inc., 141
Elm Street, Westfield, Massachusetts 01085 or at (413) 568-1911. All
comments will be forwarded directly to the Board of Directors.
It is Westfield Financial's policy that all directors and nominees
should attend the Annual Meeting. At the 2004 Annual Meeting, five members
of the Board of Directors were in attendance.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND MANAGEMENT
Meetings and Committees of the Board of Directors
Westfield Financial's Board of Directors currently consists of eleven
members. The Board of Directors oversees our business and monitors the
performance of our management. In accordance with our corporate governance
procedures, the Board of Directors does not involve itself in the day-to-
day operations of Westfield Financial. Westfield Financial's executive
officers and management oversee our day-to-day operations. Our directors
fulfill their duties and responsibilities by attending regular meetings of
the Board, which are held on a quarterly basis. Our directors also discuss
business and other matters with key executives and our principal external
advisers (legal counsel, auditors, financial advisors and other
consultants).
The Board of Directors of Westfield Financial held four regular
meetings during the fiscal year ended December 31, 2004. The Board of
Directors of Westfield Bank held twelve meetings during the fiscal year
ended December 31, 2004. Each incumbent director attended at least 75% of
the meetings of the Board of Directors, plus meetings of committees on
which that particular director served during this period.
Committees of the Board
The Board of Directors of Westfield Financial has established the
following committees:
Executive Committee. The Executive Committee exercises the powers of
the Board of Directors between Board meetings. The Executive Committee
consists of Directors Colton, Lane, O'Neil, C. Sullivan and Williams. The
Executive Committee of Westfield Financial met four times during the 2004
fiscal year; however, the Executive Committee of Westfield Bank, which
serves the same functions and has the identical make-up, met forty times
during the 2004 fiscal year.
Audit Committee. The Audit Committee is chaired by Director Placek,
with Directors Crowley and McClure as members. The Audit Committee assists
the Board by overseeing the audit coverage and monitoring the accounting,
financial reporting, data processing, regulatory and internal control
environments. The primary duties and responsibilities of the Audit
Committee are to: (1) oversee and monitor the financial reporting process
and internal controls system; (2) review and evaluate the audit performed
by outside auditors and report any substantive issues found during the
audit to the Board; (3) appoint, compensate and oversee the work of the
independent auditors; (4) review and approve all transactions with
affiliated parties; and (5) provide an open avenue of communication among
the independent auditors, financial and senior management, the internal
audit department and the Board. All
9
members of the Audit Committee are independent directors as defined under
the American Stock Exchange listing standards. Westfield Financial
believes that Mr. Crowley qualifies as an Audit Committee Financial Expert
as that term is defined by SEC regulations. The Board of Directors has
adopted a written charter for the Audit Committee, a copy of which is
attached hereto as Appendix A. The Audit Committee of Westfield Financial
met five times in the 2004 fiscal year.
Compensation Committee. The Compensation Committee provides advice
and recommendations to the Board of Directors in the areas of employee
salaries and benefit programs. The Compensation Committee consists of
Directors Lane, Pohl and T. Sullivan with Director Lane serving as
Chairperson of the Committee. All members of the Compensation Committee
are independent directors as defined by the American Stock Exchange listing
standards. The Compensation Committee of Westfield Financial met three
times during the 2004 fiscal year.
Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee (the "Nominating Committee") reviews and
recommends nominees for election as directors and develops and recommends
to the Board corporate governance guidelines. Directors O'Neil, T.
Sullivan, C. Sullivan and Colton are members of the Nominating Committee.
All members of the Nominating Committee are independent directors as
defined under the American Stock Exchange listing standards. The Board of
Directors has adopted a written charter for the Nominating and Corporate
Governance Committee, a copy of which is attached hereto as Appendix B. The
Nominating Committee met once during the year ended December 31, 2004.
In accordance with Westfield Financial's bylaws, nominations of
individuals for election to the Board at an annual meeting of shareholders
may be made by any shareholder of record of Westfield Financial entitled to
vote for the election of directors at such meeting who provides timely
notice in writing to the Secretary of Westfield Financial. To be timely, a
shareholder's notice must be delivered to or received by the Secretary not
less than one hundred twenty (120) calendar days in advance of the
anniversary date of Westfield Financial's proxy statement released to
shareholders in connection with the previous year's annual meeting of
shareholders. The shareholder's notice to the Secretary must set forth
certain information regarding the proposed nominee and the shareholder
making such nomination. If a nomination is not properly brought before the
meeting in accordance with Westfield Financial's bylaws, the Chairman of
the meeting may determine that the nomination was not properly brought
before the meeting and shall not be considered. For additional information
about Westfield Financial's director nomination requirements, please see
Westfield Financial's bylaws.
It is the policy of the Committee to select individuals as director
nominees who shall have the highest personal and professional integrity,
who shall have demonstrated exceptional ability and judgment and who shall
be most effective, in conjunction with the other nominees to the Board, in
collectively serving the long-term interests of the shareholders.
Shareholder nominees are analyzed by the Committee in the same manner as
nominees that are identified by the Committee. Westfield Financial does
not pay a fee to any third party to identify or evaluate nominees.
Robert T. Crowley, Jr., Harry C. Lane, William H. McClure and Paul R.
Pohl were each nominated by the Nominating Committee. As of December 18,
2004, the Nominating and Corporate Governance Committee had not received
any shareholder recommendations for nominees in connection with the 2005
Annual Meeting.
10
AUDIT COMMITTEE REPORT
The following Audit Committee Report is provided in accordance with
the rules and regulations of the Securities and Exchange Commission (the
"SEC"). Pursuant to such rules and regulations, this report shall not be
deemed "soliciting materials," filed with the SEC, subject to Regulation
14A or 14C of the SEC or subject to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended.
Westfield Financial's Audit Committee has reviewed and discussed the
audited financial statements of Westfield Financial for the fiscal year
ended December 31, 2004 with management and its independent auditor, Wolf &
Company, P.C., a registered public accounting firm. Westfield Financial's
Audit Committee has discussed the matters required by Statement on Auditing
Standards No. 61, Communication with Audit Committee, as may be modified or
supplemented, with Wolf & Company, P.C.
Westfield Financial's Audit Committee has also received the written
disclosures and the letter from Wolf & Company, P.C. required by
Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, has discussed the independence of Wolf & Company, P.C.
and considered whether the provision of non-audit services by Wolf &
Company, P.C. is compatible with maintaining the auditor's independence.
Based on the review and discussions noted above, Westfield
Financial's Audit Committee recommended to the Board that Westfield
Financial's audited financial statements be included in the company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2004 to
be filed with the Securities and Exchange Commission.
A representative of Wolf & Company, P.C. is expected to be present at
the annual meeting to respond to appropriate questions and will have the
opportunity to make a statement if he or she so desires.
Westfield Financial, Inc.
Audit Committee
Richard C. Placek, Chairperson
Robert T. Crowley, Jr.
William H. McClure
11
PRINCIPAL ACCOUNTANT FEES AND SERVICES
During the fiscal years ended December 31, 2003 and December 31,
2004, Westfield Financial retained and paid Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates
(collectively, the "Deloitte Entities"), and Wolf & Company, P.C. to
provide audit and other services as follows:
AUDIT FEES
Wolf &
Company, P.C. Deloitte & Touche LLP
------------- ---------------------
2004 2004 2003
------------- ------- --------
<s> <c> <c> <c>
Audit(1) $35,000 $71,000 $203,000
Audit-Related Fees - - -
Tax Fees(2) 25,000 - -
All Other Fees - - -
Total $60,000 $71,000 $203,000
<FN>
- --------------------
<F1> Audit fees consisted of audit work performed in the preparation of
financial statements as well as work generally only the independent
auditors can reasonably be expected to provide, such as statutory
audits.
<F2> Tax fees consisted of assistance with matters related to tax
compliance and counseling.
</FN>
PREAPPROVAL POLICIES AND PROCEDURES
Preapproval of Services. The Audit Committee shall preapprove all
auditing services and permitted non-audit services (including the fees and
terms) to be performed for Westfield Financial by its independent auditor,
subject to the de minimis exception for non-audit services described below
which are approved by the Committee prior to completion of the audit.
Exception. The preapproval requirement set forth above shall not be
applicable with respect to non-audit services if:
(i) The aggregate amount of all such services provided constitutes
no more than five percent of the total amount of revenues paid
by Westfield Financial to its auditor during the fiscal year in
which the services are provided;
(ii) Such services were not recognized by Westfield Financial at the
time of the engagement to be non-audit services; and
(iii) Such services are promptly brought to the attention of the
Committee and approved prior to the completion of the audit by
the Committee or by one or more members of the Committee who
are members of the Board of Directors to whom authority to
grant such approvals has been delegated by the Committee.
12
Delegation. The Committee may delegate to one or more designated
members of the Committee the authority to grant required preapprovals. The
decisions of any member to whom authority is delegated under this paragraph
to preapprove activities under this subsection shall be presented to the
full Committee at its next scheduled meeting.
The Audit Committee preapproved 100% of the services performed by the
Deloitte Entities pursuant to the policies outlined above.
DIRECTOR COMPENSATION
Meeting Fees. The members of the board of directors of Westfield
Financial are identical to those of Westfield Bank. To date, Westfield
Bank has compensated its directors for their services to the Bank.
Westfield Financial has not paid any additional compensation to its
directors for their additional services to the holding company. Westfield
Financial expects to continue this practice until there is a business
reason to establish separate compensation fees.
Westfield Bank's practice has been to pay a fee of $800 to each of
its non-employee directors for attendance at each Board meeting. In
addition, each member of the Executive Committee received $1,733 per month
for meetings, each member of the Audit Committee received $500 for each
meeting the member attended, each member of the Compensation Committee
received $250 for each meeting the member attended, and each member of the
Nominating Committee received $250 for each meeting the member attended.
Westfield Bank paid fees totaling $197,000 to its non-employee directors
for the year ended December 31, 2004.
Directors' Deferred Compensation Plan. Westfield Bank has
established the Westfield Bank Directors' Deferred Compensation Plan for
the benefit of non-employee directors. Under the Deferred Compensation
Plan, each non-employee director may make an annual election to defer
receipt of all or a portion of his or her director fees received from
Westfield Financial and Westfield Bank. The deferred amounts are allocated
to a deferral account and credited with interest at an annual rate equal to
the rate on the highest yielding certificate of deposit issued by Westfield
Bank during the year or according to the investment return of other assets
as may be selected by the Compensation Committee of Westfield Bank. The
Deferred Compensation Plan is an unfunded, non-qualified plan that provides
for distribution of the amounts deferred to participants or their
designated beneficiaries upon the occurrence of certain events such as
death, retirement, disability or a change in control of Westfield Financial
or Westfield Bank (as those terms are defined in the Deferred Compensation
Plan).
EXECUTIVE OFFICER COMPENSATION
Compensation Committee Report on Executive Compensation
The Compensation Committee is composed of Directors Lane, Pohl and T.
Sullivan with Director Lane serving as the Chairperson of the Committee.
None of the members of the Compensation Committee were officers or
employees of Westfield Financial or its subsidiaries during 2004 or in
prior years.
The following Report of Westfield Financial's Compensation Committee
is provided in accordance with the rules and regulations of the SEC.
Pursuant to such rules and regulations, this Report shall not be deemed
"soliciting material," filed with the SEC subject to Regulation 14A or 14C
of the SEC or subject to the liabilities of Section 18 of the Exchange Act.
13
On December 27, 2001, Westfield Financial, Inc. became the holding
company for Westfield Bank upon completion of a corporate reorganization of
Westfield Mutual Holding Company and related initial stock offering by
Westfield Financial.
The Compensation Committee provides advice and recommendations to the
Board of Directors in the areas of employee salaries and benefit programs.
Compensation of the President and Chief Executive Officer and other
executive officers of Westfield Bank for the fiscal year ended 2004 was
paid by Westfield Bank and determined by the Board of Directors.
The Committee reviews the compensation and benefits programs for all
executive officers on an annual basis. Mr. Williams did not participate in
the committee's decisions regarding his own compensation review and
recommendation in 2004 or in prior years.
The Committee strives to provide a compensation program that assures
both the motivation and retention of the executive officers, proper
alignment with the financial interests of Westfield Financial's
shareholders, and competitiveness with the external marketplace. To this
end, the committee reviewed the compensation practices of a peer group of
companies with similar size and business mix to that of Westfield Bank in
order to develop recommendations for Westfield Bank's executive officers.
Westfield Bank's compensation program for executive officers consists
of: base salary, annual bonuses and long-term incentive awards. These
elements are intended to provide an overall compensation package that is
commensurate with Westfield Bank's financial resources, that is appropriate
to assure the retention of experienced management personnel, and that
aligns their financial interests with those of Westfield Financial's
shareholders.
Base Salaries
Salary levels recommended by the Committee are intended to be
competitive with salary levels of the companies in Westfield Bank's peer
group, commensurate with the executive officers' respective duties and
responsibilities, and reflect the financial performance of Westfield Bank.
Stock Options
Westfield Financial has implemented the 2002 Stock Option Plan under
which executive officers, employees, and directors are eligible to receive
awards. The Compensation Committee has determined stock option grants
based on the financial performance achieved by Westfield Bank, and the
level of long-term incentive awards made by companies in the peer group.
Recognition and Retention Plan
Westfield Financial has implemented the 2002 Recognition and
Retention Plan under which executive officers, employees, and directors are
eligible to receive restricted stock awards. The Compensation Committee
has determined restricted stock awards based on the financial performance
achieved by Westfield Bank, and the level of long-term incentive awards
made by companies in the peer group.
14
Chief Executive Officer
For the fiscal year ended December 31, 2004, Mr. Williams' base
salary was $346,614 and he was awarded a bonus of $51,992. He was also
eligible to participate in the 2002 Stock Option Plan and the 2002
Recognition and Retention Plan. During fiscal year 2004, Mr. Williams was
not awarded any options under the 2002 Stock Option Plan and was not
awarded any shares under the 2002 Recognition and Retention Plan.
Westfield Financial, Inc.
Compensation Committee
Harry C. Lane, Chairperson
Paul R. Pohl
Thomas C. Sullivan
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the executive officers of Westfield Financial served as a
member of another entity's Board of Directors or as a member of the
Compensation Committee (or other board committee performing equivalent
functions) during 2004, which entity had an executive officer serving on
the Board of Directors or as a member of the Compensation Committee of
Westfield Financial. There are no interlocking relationships between
Westfield Financial and other entities that might affect the determination
of the compensation of our executive officers.
15
PERFORMANCE GRAPH
The following graph compares Westfield Financial, Inc.'s total
cumulative shareholder return by an investor who invested $100.00 on
December 28, 2001, the date following Westfield Financial, Inc.'s
conversion, to December 31, 2004, to the total return by an investor who
invested $100.00 in each of the Russell 2000 Index and the Nasdaq Bank
Index for the same period.
COMPARISON OF 3 YEAR CUMULATIVE TOTAL RETURN
AMONG WESTFIELD FINANCIAL, INC., THE RUSSELL 2000 INDEX
AND THE NASDAQ BANK INDEX
[GRAPH]
Cumulative Total Return
------------------------------------------------
12/28/01 12/01 12/02 12/03 12/04
-------- ------ ------ ------ ------
<s> <c> <c> <c> <c> <c>
Westfield Financial, Inc. 100.00 100.22 116.97 181.26 199.67
Russell 2000 100.00 98.96 78.69 115.88 147.11
Nasdaq Bank 100.00 99.30 101.65 130.78 153.33
16
SUMMARY COMPENSATION TABLE
Summary Compensation Table. The following table provides information
about the compensation paid for 2004 to Westfield Financial's and Westfield
Bank's President and Chief Executive Officer and to the four other most
highly compensated executive officers whose salary and bonus for 2004 was
at least $100,000.
Long Term
Compensation
Annual Compensation Awards
--------------------------------------- ---------------------
Other Restricted
Name and Principal Annual Stock All Other
Positions with Westfield Compensation Awards Options Compensation
Financial Year Salary($) Bonus($) ($)(1) ($)(2) (#)(3) ($)(4)
- -------------------------- ---- --------- -------- ------------ ---------- ------- ------------
<s> <c> <c> <c> <c> <c> <c> <c>
Donald A. Williams, 2004 $346,614 $51,992 - - - $204,524
President and Chief 2003 326,482 33,904 - - - 190,042
Executive Officer 2002 307,930 15,256 - 705,110 120,000 146,629
Michael J. Janosco, Jr., 2004 $186,405 $27,961 - - - $ 23,675
Chief Financial Officer 2003 179,036 18,592 - - - 24,242
and Treasurer 2002 165,555 8,366 - 423,066 72,000 13,916
Victor J. Carra, 2004 $174,173 $26,126 - - - $ 82,466
Executive Vice President 2003 167,284 17,372 - - - 77,480
2002 156,338 7,817 - 423,066 72,000 42,621
James C. Hagan, 2004 $145,614 $21,842 - - - $ 18,074
Vice President 2003 137,150 14,242 - - - 18,285
2002 124,670 6,234 - 143,900 12,000 9,824
Rebecca S. Kozaczka, 2004 $104,629 $15,694 - - - $ 12,217
Vice President 2003 100,490 10,436 - - - 13,580
2002 96,616 4,831 - 122,315 9,000 7,807
<FN>
- --------------------
<F1> Westfield Bank provides its executive officers with non-cash benefits
and perquisites, such as the use of employer-owned or leased
automobiles. Management of the Bank believes that the aggregate value
of these benefits for 2004 did not, in the case of any executive
officer, exceed $50,000 or 10% of the aggregate salary and annual
bonus reported for him or her in the Summary Compensation Table.
<F2> Pursuant to the Westfield Financial, Inc. 2002 Recognition and
Retention Plan, Messrs. Williams, Janosco, Carra, Hagan and Ms.
Kozaczka were granted 49,000, 29,400, 29,400, 10,000 and 8,500 shares
of restricted stock, respectively, effective July 26, 2002. These
awards vest in 20% increments each year. Dividends attributed to such
awards are distributed to participants from the custodial account
holding shares under the Recognition and Retention Plan. The dollar
amount shown above is based on the fair market value of a share of
common stock on July 26, 2002, which was $14.39 per share. The value
of aggregate restricted stock awards as of December 31, 2004 was
$1,265,180, $759,108, $759,108, $258,200 and $219,470 for each of
Messrs. Williams, Janosco, Carra, Hagan and Ms. Kozaczka,
respectively. Accelerated vesting occurs in the case of death or
disability and upon retirement or a change in control.
<F3> Represents shares of common stock as to which the named individual
has the right to acquire beneficial ownership pursuant to the
exercise of stock options. Such options were granted on July 26,
2002 pursuant to the Westfield Financial, Inc. 2002 Stock Option
Plan, and vest in 20% increments each year. Accelerated vesting
occurs in the case of death or disability and upon retirement or a
change in control.
<F4> Includes the following components for fiscal 2004: (1) employer
matching contributions to the Westfield Bank 401(k) Plan: Mr.
Williams - $6,150; Mr. Janosco - $5,592; Mr. Carra - $5,225; Mr.
Hagan - $4,368; and Ms. Kozaczka - $3,139; (2) the dollar value of
premium payments for life insurance coverage provided by Westfield
Bank: Mr. Williams - $1,503; Mr. Janosco - $1,198; Mr. Carra -
$1,772; Mr. Hagan - $516; and Ms. Kozaczka - $587; (3) amounts
accrued under deferred compensation agreements: Mr. Williams -
$160,757 and Mr. Carra - $59,692; (4) the value of allocations under
the ESOP: Mr. Williams - $18,569; Mr. Janosco - $16,885; Mr. Carra -
$15,777; Mr. Hagan - $13,190; and Ms. Kozaczka - $9,491; and (5) the
value accrued under the Benefit Restoration Plan: Mr. Williams -
$17,545.
</FN>
17
EMPLOYMENT AGREEMENTS
Westfield Financial and Westfield Bank have jointly entered into
employment agreements with Mr. Donald A. Williams to secure his services as
President and Chief Executive Officer, Mr. Victor J. Carra to secure his
services as Executive Vice President, and Mr. Michael J. Janosco, Jr., to
secure his services as Chief Financial Officer. For purposes of Westfield
Financial's obligations, the employment agreements have rolling three-year
terms beginning on January 1, 2002, which by decision of the executive or
joint decision of Westfield Financial and Westfield Bank may be converted
to a fixed three-year term. For purposes of Westfield Bank's obligations,
the employment agreements have fixed terms of three years beginning on
January 1, 2004, and may be renewed annually after a review of the
executive's performance. These agreements provide for minimum annual
salaries of $346,614, $174,173 and $186,405, respectively, discretionary
cash bonuses, and participation on generally applicable terms and
conditions in other compensation and fringe benefit plans. They also
guarantee customary corporate indemnification and errors and omissions
insurance coverage throughout the employment term and for six years after
termination. Westfield Financial and Westfield Bank may terminate each
executive's employment, and each executive may resign, at any time with or
without cause. However, in the event of termination during the term without
cause, they will owe the executive severance benefits generally equal to
the value of the cash compensation and fringe benefits that the executive
would have received if he had continued working for an additional three
years. The same severance benefits would be payable if the executive
resigns during the term following: a loss of title, office or membership on
the board of directors; material reduction in duties, functions or
responsibilities; involuntary relocation of the executive's principal place
of employment to a location over 25 miles in distance from Westfield Bank's
principal office in Westfield, Massachusetts and over 25 miles from the
executive's principal residence; or other material breach of contract by
Westfield Financial or Westfield Bank which is not cured within 30 days.
For 60 days after a change in control, each executive may resign for any
reason and collect severance benefits as if he or she had been discharged
without cause. The employment agreements also provide uninsured death and
disability benefits. If Westfield Financial or Westfield Bank experiences a
change in ownership, a change in effective ownership or control or a change
in the ownership of a substantial portion of their assets as contemplated
by section 280G of the Internal Revenue Code, a portion of any severance
payments under the employment agreements might constitute an "excess
parachute payment" under current federal tax laws. Federal tax laws impose
a 20% excise tax, payable by the executive, on excess parachute payments.
Under the employment agreements, Westfield Financial would reimburse the
executive for the amount of this excise tax and would make an additional
gross-up payment so that, after payment of the excise tax and all income
and excise taxes imposed on the reimbursement and gross-up payments, the
executive will retain approximately the same net-after tax amounts under
the employment agreement that he or she would have retained if there were
no 20% excise tax. The effect of this provision is that Westfield
Financial, rather than the executive, bears the financial cost of the
excise tax. Neither Westfield Financial nor Westfield Bank could claim a
federal income tax deduction for an excess parachute payment, excise tax
reimbursement payment or gross-up payment.
CHANGE OF CONTROL AGREEMENTS
Westfield Bank and Westfield Financial have jointly entered into one-
year change of control agreements with three vice presidents: James C.
Hagan, Rebecca S. Kozaczka and Deborah J. McCarthy. The term of these
agreements is perpetual until Westfield Bank gives notice of non-extension,
at which time the term is fixed for one year. Generally, Westfield Bank may
terminate the employment of any officer covered by these agreements, with
or without cause, at any time prior to a change of control without
obligation for severance benefits. However, if Westfield Bank or Westfield
Financial signs a merger or other business combination agreement, or if a
third party makes a tender offer or initiates a proxy contest, it could not
terminate an officer's employment without cause without liability for
severance benefits. The severance benefits would generally be equal to the
value of the cash compensation and
18
fringe benefits that the officer would have received if he or she had
continued working for an additional one year. Westfield Bank would pay the
same severance benefits if the officer resigns after a change of control
following a loss of title, office or membership on the Board of Directors,
material reduction in duties, functions or responsibilities, involuntary
relocation of his or her principal place of employment to a location over
25 miles from Westfield Bank's principal office on the day before the
change of control and over 25 miles from the officer's principal residence
or other material breach of contract which is not cured within 30 days.
These agreements also provide uninsured death and disability benefits. If
Westfield Bank or Westfield Financial experiences a change in ownership, a
change in effective ownership or control or a change in the ownership of a
substantial portion of their assets as contemplated by section 280G of the
Internal Revenue Code, a portion of any severance payments under the change
of control agreements might constitute an "excess parachute payment" under
current federal tax laws. Any excess parachute payment would be subject to
a federal excise tax payable by the officer and would be non- deductible by
Westfield Bank and Westfield Financial for federal income tax purposes. The
change of control agreements do not provide a tax indemnity.
BENEFIT PLANS
Pension Plan. Westfield Bank maintains a pension plan for its
eligible employees. Generally, employees of Westfield Bank begin
participation in the pension plan once they reach age 21 and complete 1,000
hours of service in a consecutive 12-month period. Participants in the
pension plan become vested in their accrued benefit under the pension plan
upon the earlier of the: (1) attainment of their "normal retirement age"
(as described in the pension plan) while employed at Westfield Bank; (2)
completion of five vesting years of service with Westfield Bank; or (3)
death or disability of the participant. Participants are generally credited
with a vesting year of service for each year in which they complete at
least 1,000 hours of service. A participant's normal benefit under the
pension plan equals the sum of (1) 1.25% of the participant's average
compensation (generally defined as the average taxable compensation for the
three consecutive limitation years that produce the highest average) by the
number of years of service the participant has under the plan up to 25
years of service, plus (2) 0.6% of the excess of the participant's average
compensation over the participant's covered compensation (the social
security taxable wage base for the 35 years ending in the year the
participant becomes eligible for non-reduced social security benefits) for
each year of service under the plan up to 25 years of service. Participants
may retire at or after age 65 and receive their full benefit under the
plan. Participants may also retire early at age 62 or at age 55 with ten
years of service or at age 50 with 15 years of service under the plan and
receive a reduced retirement benefit. Pension benefits are payable in equal
monthly installments for life, or for married persons, as a joint survivor
annuity over the lives of the participant and spouse. Participants may also
elect a lump sum payment with the consent of their spouse. If a participant
dies while employed by Westfield Bank, a death benefit will be payable to
either his or her spouse or estate, or named beneficiary, equal to the
entire amount of the participant's accrued benefit in the plan.
19
The following table indicates the annual employer-provided retirement
benefits that would be payable under the pension plan upon retirement at
age 65 to a participant electing to receive his pension benefit in the
standard form of benefit, assuming various specified levels of plan
compensation and various specified years of credited service. Under the
Internal Revenue Code, maximum annual benefits under the pension plan are
limited to $165,000 per year and annual compensation for benefit
calculation purposes is limited to $205,000 per year for the 2004 calendar
year.
Years of Service
Average Annual ----------------------------------------
Compensation 10 15 20 25
-------------- ------- ------- ------- -------
<s> <c> <c> <c> <c>
$ 20,000 $ 2,500 $ 3,750 $ 5,000 $ 6,250
40,000 5,033 7,500 10,000 12,500
60,000 8,323 12,484 16,646 20,807
80,000 12,023 18,034 24,046 30,057
100,000 15,723 23,584 31,446 39,307
120,000 19,423 29,134 38,846 48,557
125,000 20,348 30,522 40,696 50,870
140,000 23,123 34,684 46,246 57,807
150,000 24,973 37,459 49,946 62,432
175,000 29,598 44,397 59,196 73,995
200,000 34,223 51,334 68,446 85,557
205,000 35,148 52,722 70,296 87,870
The benefits listed on the table above for the pension plan are not
subject to a reduction for Social Security benefits or any other offset
amount. As of December 31, 2004, Messrs. Williams, Janosco, Carra, Hagan
and Ms. Kozaczka had 25, 5, 29, 10 and 19 years of service, respectively,
for purposes of the pension plan (benefit service is recognized up to a
maximum of 25 years under the terms of this plan).
401(k) Plan. Westfield Bank has adopted the SBERA 401(k) Plan, a tax-
qualified defined contribution plan, for substantially all employees of
Westfield Bank who have attained age 21 and completed at least three months
of service. Eligible employees may contribute from 1% to 15% of annual
compensation to the plan on a pre-tax basis each year, subject to
limitations of the Internal Revenue Code (for 2004 the limit was $13,000).
Westfield Bank makes a matching contribution to the plan equal to 50% of
the first six percent of annual compensation contributed to the plan on a
pre-tax basis by a participant after such participant has completed one
year of service. This plan has an individual account for each participant's
contributions and allows each participant to direct the investment of his
or her account. One permitted investment is the common stock of Westfield
Financial.
Employee Stock Ownership Plan ("ESOP"). This plan is a tax-qualified
plan that covers substantially all employees who have completed 1,000 hours
of service in a 12 month period and attained age 21. The ESOP took effect
at the completion of the reorganization. Westfield Financial has lent this
plan enough money to purchase up to 8% of the shares of the total number of
shares held by persons other than Westfield Mutual Holding Company. The
plan intends to purchase all of these shares in private transactions or on
the open market from time to time to the extent that shares are available
for purchase on reasonable terms. Although contributions to this plan will
be discretionary, Westfield Bank intends to contribute enough money each
year to make the required principal and interest payments on the loan from
Westfield Financial. This loan is for a term of 30 years and calls for
level annual payments of principal and interest. The plan pledges the
shares it purchases as collateral for the loan and holds them in a
20
suspense account. The plan will not distribute the pledged shares right
away. Instead, it will release a portion of the pledged shares annually.
Assuming the plan repays its loan as scheduled over a 30-year term, we
expect that 1/30th of the shares will be released annually in years 2002
through 2032. The plan will allocate the shares released each year among
the accounts of participants in proportion to their compensation for the
year. For example, if a participant's compensation for a year represents 1%
of the total compensation of all participants for the year, the plan would
allocate to that participant 1% of the shares released for the year,
subject to certain legal limitations imposed on tax-qualified plans.
Participants direct the voting of shares allocated to their accounts.
Shares in the suspense account will usually be voted by the plan trustee in
a way that mirrors the votes which participants cast for shares in their
individual accounts. This plan may purchase additional shares in the
future, and may do so using borrowed funds, cash dividends, periodic
employer contributions or other cash flow.
Benefit Restoration Plan. Westfield Financial has also established
the Benefit Restoration Plan of Westfield Financial in order to provide
restorative payments to executives who are prevented from receiving the
full benefits contemplated by the ESOP's benefit formula as well as the
401(k) Plan's benefit formula. The restorative payments consist of payments
in lieu of shares that cannot be allocated to participants under the ESOP
due to the legal limitations imposed on tax-qualified plans and, in the
case of participants who retire before the repayment in full of the ESOP's
loan, payments in lieu of the shares that would have been allocated if
employment had continued through the full term of the loan. The restorative
payments also consist of amounts unable to be provided under the 401(k)
Plan due to certain legal limitations imposed on tax-qualified plans.
Deferred Compensation Agreements. Westfield Bank has also entered
into deferred compensation agreements with each of Donald A. Williams and
Victor J. Carra. Under these agreements, each executive is guaranteed
monthly payments equal to 70% of his monthly salary after retirement for
the remainder of the executive's life or 240 months, whichever is greater.
The amounts of these payments is reduced by any payments received from the
pension plan and are also reduced by Social Security payments attributable
to contributions made by Westfield Bank. These agreements also provide for
payments upon the death or disability of the executive that are equal in
amount to the payments that would have been payable to the executive upon
retirement with such payments being made for a period of 120 months.
2002 Stock Option Plan. Westfield Financial has a Stock Option Plan
in effect which was approved by the shareholders and became effective on
July 26, 2002. The purpose of the Stock Option Plan is to encourage the
retention of key employees and directors by facilitating their purchase of
a stock interest in Westfield Financial. The Stock Option Plan is not
subject to ERISA and is not a tax-qualified plan. Westfield Financial has
reserved an aggregate of 497,260 shares of common stock for issuance upon
the exercise of stock options granted under the Plan.
21
The following table provides the value for "in-the-money" options,
which represent the positive spread between the exercise price of any such
existing stock options and the closing price per share of the common stock
on December 31, 2004, the last trading day of Westfield Financial's 2004
fiscal year, which was $25.82 per share.
2004 Fiscal Year End Option/SAR Values
- ---------------------------------------------------------------------------------------------------------------
Shares Value Number of Securities Value of Unexercised In-the-
Acquired Realized Underlying Unexercised Money Options/SARs
on on Options/SAR at at Fiscal Year-end
Exercise Exercise Fiscal Year-end (#) ($)
Name (#) ($) Exercisable/Unexercisable(1) Exercisable/Unexercisable(1)
- ----------------------- -------- -------- ---------------------------- ----------------------------
<s> <c> <c> <c> <c>
Donald A. Williams - - 48,000/72,000 548,640/822,960
Michael J. Janosco, Jr. - - 28,800/43,200 329,184/493,776
Victor J. Carra - - 28,800/43,200 329,184/493,776
James C. Hagan - - 4,800/7,200 54,864/82,296
Rebecca S. Kozaczka - - 3,600/5,400 41,148/61,722
<FN>
- --------------------
<F1> Based on the following information with respect to options: the
closing price per share of common stock on December 31, 2004 was
$25.82 per share and all options have an exercise price of $14.39 per
share, which equals a spread of $11.43 per share.
</FN>
2002 Recognition and Retention Plan ("RRP"). The RRP was adopted by
the Board of Directors of Westfield Financial, approved by its shareholders
and became effective on July 26, 2002. Similar to the Stock Option Plan,
the RRP functions as a long-term incentive compensation program for
eligible officers, employees and outside directors of Westfield Financial
and Westfield Bank. The RRP is not subject to ERISA and is not a tax-
qualified plan. The members of the Board's Compensation Committee who are
disinterested directors ("RRP Committee") administer the RRP. Westfield
Financial pays all costs and expenses of administering the RRP.
As required by the terms of the RRP, Westfield Financial has
established a trust ("Trust") and has contributed to the Trust in order to
fund the purchase of 198,904 shares of common stock, the maximum number of
restricted stock awards ("Restricted Stock Awards" or "Awards") that may be
granted under the RRP. Shares of common stock subject to a Restricted
Stock Award are held in the Trust until the Award vests at which time the
shares of common stock attributable to the portion of the Award that have
vested are distributed to the Award holder. An Award recipient is entitled
to exercise voting rights and receive cash dividends with respect to the
shares of common stock subject to his or her Award, whether or not the
underlying shares have vested.
Restricted Stock Awards are granted under the RRP on a discretionary
basis to eligible officers, executives and outside directors selected by
the RRP Committee.
Westfield Financial may amend or terminate the RRP, in whole or in
part, at any time, subject to the requirements of all applicable laws.
22
LIMITATIONS ON FEDERAL TAX DEDUCTIONS FOR EXECUTIVE OFFICER COMPENSATION
Federal tax laws may limit the federal income tax deduction for
salaries paid or for other compensation paid for personal services actually
rendered to $1 million each tax year for each executive officer named in
the summary compensation table in Westfield Financial's proxy statement for
that year. This limit will not apply to non-taxable compensation under
various broad-based retirement and fringe benefit plans or to compensation
that is "qualified performance-based compensation" under applicable law.
Westfield Financial and Westfield Bank expect that the Compensation
Committee will take this deduction limitation into account with other
relevant factors in establishing future compensation levels of their
executive officers and in setting the terms of compensation programs.
Currently, none of our executive officers receive annual compensation
expected to exceed this limit. However, there is no assurance that all
compensation paid to our executive officers will be deductible for federal
income tax purposes. To the extent that compensation paid to any executive
officer is not deductible, the net after-tax cost of providing the
compensation will be higher and the net after-tax earnings of Westfield
Financial and Westfield Bank will be reduced.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Westfield Bank makes loans to its executive officers, employees and
directors. These loans are made in the ordinary course of business and on
the same terms and conditions as those of comparable transactions with the
general public prevailing at the time, in accordance with our underwriting
guidelines, and do not involve more than the normal risk of collectibility
or present other unfavorable features. At December 31, 2004, loans to non-
employee directors and their associates totaled $12.9 million.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires Westfield Financial's directors and executive officers, and
persons who own more than 10% of Westfield Financial's common stock, to
report to the Securities and Exchange Commission their initial ownership of
Westfield Financial's common stock and any subsequent changes in that
ownership. Specific due dates for these reports have been established by
the Securities and Exchange Commission and Westfield Financial is required
to disclose in this proxy statement any late filings or failures to file.
Based solely on its review of the copies of such reports furnished to
Westfield Financial and written representations that no other reports were
required during the fiscal year ended December 31, 2004, all Section 16(a)
filing requirements applicable to Westfield Financial's executive officers
and directors during fiscal 2004 were met.
INDEPENDENT ACCOUNTANTS
Effective June 15, 2004, the Audit Committee of the Board of
Directors voted not to reengage Deloitte & Touche LLP as Westfield
Financial's independent auditors, effective immediately. On the same date,
the Audit Committee of the Board of Directors recommended, approved and
appointed Wolf & Company, P.C. as Westfield Financial's independent
accountant for the purpose of auditing Westfield Financial's consolidated
financial statements for the year ended December 31, 2004. Wolf & Company,
P.C. will continue to serve as Westfield Financial's independent
accountants for the year ended December 31, 2005. A representative of Wolf
& Company, P.C. is expected to be present at the annual meeting to answer
questions concerning the financial statements presented and will be
permitted to make a statement at the meeting.
23
The audit reports of Deloitte & Touche LLP on the consolidated
financial statements of the Registrant as of and for the years ended
December 31, 2003 and 2002 did not contain an adverse opinion or disclaimer
of opinion and were not qualified or modified as to uncertainty, audit
scope, or accounting principles. During 2003 and 2002 and any subsequent
interim periods through June 15, 2004, there were no disagreements with
Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements, if not resolved to Deloitte & Touche's satisfaction, would
have caused it to make reference in connection with its report to the
subject matter of the disagreement. We requested Deloitte & Touche LLP
furnish a letter addressed to the SEC stating whether it agrees with these
statements made by us and, if not, stating the respects in which it does
not agree. A copy of this letter, dated March 31, 2004, was attached as an
exhibit to the Form 8-K filed with the SEC on June 21, 2004.
ADDITIONAL INFORMATION
INFORMATION ABOUT SHAREHOLDER PROPOSALS
If you wish to submit proposals to be included in our proxy statement
for the 2006 Annual Meeting of Westfield Financial shareholders, we must
receive them on or before December 16, 2005, pursuant to the proxy
soliciting regulations of the SEC. Nothing in this paragraph shall be
deemed to require Westfield Financial to include in its proxy statement and
proxy card for such meeting any shareholder proposal which does not meet
the requirements of the SEC in effect at the time. Any such proposal will
be subject to 17 C.F.R. [SECTION]240.14a-8 of the Rules and Regulations
promulgated by the SEC under the Exchange Act.
In addition, under Westfield Financial's Bylaws, if you wish to
nominate a director or bring other business before an annual meeting (which
is not included in the proxy statement for the 2006 Annual Meeting), the
following criteria must be met: (i) you must be a shareholder of record;
(ii) you must have given timely notice in writing to the Secretary of
Westfield Financial; and (iii) your notice must contain specific
information required in our Bylaws. To be considered timely for inclusion
in our proxy statement for the 2006 Annual Meeting, we must receive your
advance written notice of business or nominations to the Board of Directors
no later than 120 days preceding the anniversary date of the release of
Westfield Financial's proxy statement for this year's annual meeting. For
example, if we release this year's proxy statement on April 15, 2005, we
should receive your advance notice of business or nomination for next
year's meeting no later than December 16, 2005.
By Order of the Board of Directors,
/s/ Philip R. Smith
Philip R. Smith
Secretary
Westfield, Massachusetts
April 15, 2005
===========================================================================
To assure that your shares are represented at the annual meeting, please
complete, sign, date and promptly return the accompanying proxy card in the
postage-paid envelope provided.
===========================================================================
24
Appendix A
----------
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF
WESTFIELD FINANCIAL, INC.
CHARTER
I. STATEMENT OF POLICY
The primary function of the Audit Committee of the Board of Directors
of Westfield Financial, Inc. ("Company") is to oversee the accounting and
financial reporting processes of the Company and audits of the Company's
financial statements. In addition, the Audit Committee must provide
assistance to the Company's Board of Directors (the "Board") in fulfilling
its responsibilities to the Company's shareholders and the investment
community relating to the Company's accounting and reporting practices and
the quality and integrity of the Company's financial reports. In so doing,
it is the responsibility of the Audit Committee to maintain free and open
means of communication among the Board, independent auditors, internal
auditors and senior management.
II. COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee shall consist of no fewer than three members,
each of whom shall meet the criteria for independence established by the
rules and regulations of the American Stock Exchange and who the Board has
affirmatively determined does not have a relationship which, in the opinion
of the Board, would interfere with the exercise of independent judgment as
an Audit Committee member. At least one Committee member must be an "Audit
Committee financial expert," as defined by the rules and regulations of the
Securities and Exchange Commission. Audit Committee members and the Audit
Committee chairperson shall be appointed by the Chairman of the Board on
the recommendation of the Nominating and Corporate Governance Committee.
If an Audit Committee chairperson is not designated or present, the members
of the Audit Committee may designate a chairperson by majority vote of the
Audit Committee membership.
III. MEETINGS
The Audit Committee shall meet at least four (4) times a year or more
frequently as circumstances require. The Audit Committee shall maintain
minutes of each meeting of the Audit Committee and shall report the
significant actions of the Audit Committee to the Board, with such
recommendations as the Audit Committee deems appropriate. The Audit
Committee should also meet periodically with the internal auditor, the
independent auditors and the Company's financial management in separate
executive sessions to discuss any matters that the Audit Committee or these
groups believe should be discussed privately with the Audit Committee.
A-1
IV. RESPONSIBILITIES AND DUTIES OF THE AUDIT COMMITTEE
The primary duties and responsibilities of the Audit Committee are to
oversee and monitor the Company's financial reporting process and internal
control system and review and evaluate the performance of the Company's
independent auditors and internal auditing staff. In fulfilling these
duties and responsibilities, the Audit Committee shall take the following
actions, in addition to performing such functions as may be assigned by
law, the Company's Articles of Organization or bylaws or the Board:
1. The Audit Committee shall review and reassess this Charter annually
and recommend any proposed changes to the Board for approval. The
Charter is to be published as an appendix to the proxy statement
every three years.
2. The Audit Committee shall be directly responsible for the
appointment, compensation, retention and oversight of the work of any
independent auditor engaged (including, resolution of disagreements
between management and the auditor regarding financial reporting) for
the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company. The
independent auditor must report directly to the Audit Committee.
3. The Audit Committee shall pre-approve all auditing services and
permitted non-audit services (including the fees and terms) to be
performed for the Company by its independent auditor, subject to the
deminimis exception for non-audit services described below which are
approved by the Committee prior to completion of the audit.
Exception. The pre-approval requirement set forth above, shall not
be applicable with respect to non-audit services if:
(i) The aggregate amount of all such services provided constitutes
no more than five percent of the total amount of revenues paid
by the Company to its auditor during the fiscal year in which
the services are provided;
(ii) Such services were not recognized by the Company at the time of
the engagement to be non-audit services; and
(iii) Such services are promptly brought to the attention of the
Audit Committee and approved prior to the completion of the
audit by the Audit Committee or by one or more members of the
Audit Committee who are members of the Board of Directors to
whom authority to grant such approvals has been delegated by
the Audit Committee.
Delegation. The Audit Committee may delegate to one or more
designated members of the Committee the authority to grant required
pre-approvals. The decisions of any member to whom authority is
delegated under this paragraph to pre-approve activities under this
subsection shall be presented to the full Audit Committee at its next
scheduled meeting.
4. The Audit Committee, in its capacity as a committee of the Board,
shall determine, and the Company shall provide, funding for payment
of: (i) compensation to any registered public accounting firm
engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company;
(ii) compensation to any advisers employed by the Audit Committee,
and as permitted by this Charter; and (iii) ordinary administrative
expenses of the Audit Committee that are necessary or appropriate in
carrying out its duties.
A-2
5. As part of the audit process, the Audit Committee shall meet with the
independent auditors to discuss and determine the scope of the audit.
The Audit Committee shall determine that the independent audit team
engaged to perform the external audit consists of competent,
experienced, financial institution auditing professionals.
6. The Audit Committee shall require the independent auditors to submit,
on an annual basis, a formal written statement setting forth all
relationships between the independent auditors and the Company that
may affect the objectivity and independence of the independent
auditors, consistent with Independence Standards Board Standard No.
1, and the Audit Committee shall actively engage in a dialogue with
the independent auditors with respect to any disclosed relationships
or services that may impact the objectivity and independence of the
independent auditors. The Audit Committee shall take, or recommend
that the full Board take, appropriate action to ensure the
independence of the independent auditors.
7. The Audit Committee shall require the independent auditors to advise
the Company of any fact or circumstance that might adversely affect
the outside auditors' independence or judgment with respect to the
Company under applicable auditing standards, including any
significant changes to the Company's accounting principles and any
items required to be communicated by the independent auditors in
accordance with SAS 61, as amended.
8. The Audit Committee shall require the independent auditors to advise
the Company if it becomes aware that any officer or employee of the
Company, or its direct or indirect subsidiaries or affiliates, is
related to a partner, employee or other representative of the
independent auditors, to the extent that such relationship might
adversely affect the Company under applicable auditing standards.
9. The Audit Committee shall meet with the independent auditors, with no
management in attendance, to openly discuss the quality of the
Company's accounting principles as applied in its financial
reporting, including issues such as (a) the appropriateness, not just
the acceptability, of the accounting principles and financial
disclosure practices used or proposed to be used by the Company, (b)
the clarity of the Company's financial disclosures and (c) the degree
of aggressiveness or conservatism that exists in the Company's
accounting principles and underlying estimates and other significant
decisions made by the Company's management in preparing the financial
disclosure and reviewed by the independent auditors. The Audit
Committee shall then meet among themselves, without operating
management or the independent auditors being present, to discuss the
information presented to them.
10. The Audit Committee shall require the independent auditors, in
reviewing the Company's financial reporting and in advising the Audit
Committee, to take into account the requirements imposed by, and the
interpretations of, the applicable federal and state banking
regulators.
11. The Audit Committee shall meet with the independent auditors and
management to review the Company's quarterly reports on Form 10-Q and
annual report on Form 10-K and discuss any significant adjustments,
management judgments and accounting estimates and any significant new
accounting policies before such forms are filed with the U.S.
Securities and Exchange Commission.
A-3
12. Upon the completion of the annual audit, the Audit Committee shall
review the audit findings, including any comments or recommendations
of the independent auditors, with the entire Board and state its
recommendation to the Board as to whether the audited financial
statements should be included in the Company's annual report on Form
10-K.
13. The Audit Committee must assure itself that the internal auditor is
free from operational duties, and that the internal auditor reports
directly to the Board or the Audit Committee regarding any audit
concerns or problems.
14. The Audit Committee shall meet at least annually with the Company's
internal auditor to assure itself that the Company has a strong
internal auditing function by reviewing the internal audit program
and assessing (grading) risk areas along with a proper control
environment that promotes accuracy and efficiency in the Company's
operations.
15. The Audit Committee shall receive reports from the Company's internal
auditor, which include a summary of findings from completed internal
audits and a progress report on the internal audit plan, together
with explanations for any deviations from the original plan.
16. The Audit Committee shall review the internal audit function of the
Company, including the independence and authority of its reporting
obligations, the proposed audit plans for the coming year and the
coordination of such plans with the independent auditors.
17. The Audit Committee shall review and concur in the appointment,
replacement, reassignment or dismissal of the Company's internal
auditor.
18. The Audit Committee shall determine whether the internal audit
function may be performed by a staff internal auditor or may be
outsourced to a third party, as deemed appropriate.
19. The Audit Committee shall consider and review with management and the
internal auditor: (a) significant findings during the year and
management's responses thereto, including the status of previous
audit recommendations, (b) any difficulties encountered in the course
of their audits, including any restrictions on the scope of
activities or access to required information, (c) any changes
required in the planned scope of the internal audit plan and (d) the
internal auditing department budget and staffing.
20. The Audit Committee shall consider and approve, if appropriate,
changes to the Company's auditing and accounting principles and
practices, as suggested by the independent auditors, the internal
auditor or management, and the Audit Committee shall review with the
independent auditors, the internal auditor and management the extent
to which such changes have been implemented (to be done at an
appropriate amount of time subsequent to the implementation of such
changes, as decided by the Audit Committee).
21. The Audit Committee shall inquire of the Company's chief executive
officer and chief financial officer as to the existence of any
significant deficiencies or material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company's ability to
record, process, summarize and report financial information, and
A-4
as to the existence of any fraud, whether or not material, that
involves management or other employees who have a significant role in
the Company's internal control over financial reporting.
22. The Audit Committee shall investigate or consider such other matters
within the scope of its responsibilities and duties as the Audit
Committee may, in its discretion, determine to be advisable. The
Audit Committee shall have the authority to engage independent
counsel and other advisers, as it deems necessary to carry out its
duties.
23. The Audit Committee shall prepare any report required by the rules of
the U.S. Securities and Exchange Commission to be included in the
Company's annual proxy statement.
24. The Audit Committee shall establish procedures for the receipt,
retention, and treatment of complaints received by the Company
regarding accounting, internal accounting controls, or auditing
matters.
25. The Audit Committee shall establish procedures for the confidential,
anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
A-5
Appendix B
----------
WESTFIELD FINANCIAL, INC.
NOMINATING & CORPORATE GOVERANCE COMMITTEE CHARTER
Article I. Purpose
The purpose of the Nominating and Corporate Governance Committee (the
"Committee") shall be to develop a process to assist the board of directors
(the "Board") of Westfield Financial, Inc. (the "Company") in identifying
qualified individuals to become Board members and officers of the Company.
Article II. Membership and Appointment
The Committee shall consist of no fewer than three members, each of whom
shall meet the criteria for independence established by the rules and
regulations of the American Stock Exchange listing standards. Members of
the Committee shall be appointed annually by the Board and shall serve at
the pleasure of the Board. Notwithstanding the foregoing, no director shall
serve on the Committee in any capacity in any year during which such
director's term as a director is scheduled to expire.
Article III. Meetings and Procedures
The Committee shall have a chairperson, and a secretary who may but need
not be a member of the Committee.
The Committee shall establish its own rules of procedure, which shall be
consistent with the bylaws of the Company and this Charter. The Committee
shall meet as needed and notice of any meeting shall be given to each
member of the Committee at least 48 hours prior to the meeting.
A quorum shall consist of at least a majority of the voting members of the
Committee. The vote of a majority of the voting members present at any
meeting at which a quorum exists, including the chairperson of the
committee who shall be eligible to vote, shall constitute the action of the
Committee.
Following each of its meetings, the Committee shall report its actions and
recommendations to the Board. The secretary of the Committee shall keep
written minutes of its meetings.
Article IV. Committee Authority and Responsibilities
The Committee shall have the following authority and responsibilities:
1. The Committee shall develop criteria, to be approved by the full
Board, for selection of new directors.
2. The Committee shall develop criteria for the evaluation of incumbent
Board members.
3. The Committee shall develop and recommend to the Board for its
approval an annual self-evaluation of the Board and report its
findings to the Board.
4. The Committee shall annually recommend to the Board for its approval
the slate of officers for the Company.
B-1
5. The Committee shall develop and recommend to the Board for its
approval a set of corporate governance guidelines.
6. The Committee may retain or terminate, in its sole discretion, any
search firm to be used to identify director and executive officer
candidates and to approve the search firm's fees and other retention
terms. The Committee shall also have authority to retain outside
counsel and any other advisors as the Committee may deem appropriate
in its sole discretion.
B-2
Westfield Financial, Inc. REVOCABLE PROXY
This Proxy is solicited on behalf of the Board of Directors of
Westfield Financial, Inc. for the Annual Meeting of Shareholders
to be held on May 20, 2005.
The undersigned shareholder of Westfield Financial, Inc. hereby appoints
Donald A. Williams and Victor J. Carra, each of them, with full powers of
substitution, to represent and to vote as proxy, as designated, all shares
of common stock of Westfield Financial, Inc. held of record by the
undersigned on March 25, 2005, at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at 10:00 a.m., Eastern Time, on May 20, 2005,
or at any adjournment or postponement thereof, upon the matters described
in the accompanying Notice of the Annual Meeting of Shareholders and Proxy
Statement, dated April 15, 2005 and upon such other matters as may properly
come before the Annual Meeting. The undersigned hereby revokes all prior
proxies.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is given, this
Proxy will be voted FOR the election of all nominees listed in Item 1.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
The Board of Directors unanimously recommends a vote "FOR" all of the
nominees named in Item 1.
I Will Attend Annual Meeting. [ ]
Please Mark Your Choice Like This
in Blue or Black Ink. [X]
- ---------------------------------------------------------------------------
1. Election of four directors for terms of three years each. Nominees:
Robert T. Crowley, Jr., Harry C. Lane, William H. McClure and Paul R.
Pohl.
For Withhold
for all nominees
[ ] [ ]
- ---------------------------------------------------------------------------
Instruction: TO WITHHOLD AUTHORITY to vote for any individual
nominee, write that nominee's name in the space provided:
----------------------------------
The undersigned hereby acknowledges
receipt of the Notice of Annual
Meeting of Shareholders and the
Proxy Statement for the Annual
Meeting dated April 15, 2005.
------------------------------------
------------------------------------
Signature(s)
Dated: , 2005
-----------------------
Please sign exactly as your name appears on this proxy. Joint owners should
each sign personally. If signing as attorney, executor, administrator,
trustee or guardian, please include your full title. Corporate or
partnership proxies should be signed by an authorized officer.